FNCE 2P91 Study Guide - Quiz Guide: Signing Bonus, The Dominion Bank, Savings Account
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You have just joined the investment banking firm of black, scholes, & merton. You can have ,000 at the end of each year for the next two years, or you can have ,000 at the end of each year for the next two years along with a ,000 signing bonus today. Your friend tom is celebrating his 35th birthday today and wants to start saving for his anticipated retirement at age 65. He wants to be able to withdraw ,000 from his saving account on each birthday for 10 years following his retirement; the first withdrawal will be on his 66th birthday. Tom intends to invest his money in the local savings and loan, which offers 8% interest per year (ear). Rather than making equal payments, he has decided to make one lump-sum payment on his 36th birthday to cover his retirement needs. What amount would he have to deposit? (draw the time line)